INCOME TAXES

Income before provision for income taxes included income from domestic operations and income from foreign operations based on the geographic location as disclosed in the table below:



	For the Years Ended December 31,
	2015			2014			2013
Income before income tax expense:
Domestic	$	(7,687	)	$	(7,229	)	$	7,001
Foreign	113,757			94,182			69,769
Total	$	106,070		$	86,953		$	76,770

The provision for income taxes consists of the following:



	For the Years Ended December 31,
	2015			2014			2013
Income tax expense (benefit) consists of:
Current
Federal	$	19,851		$	7,741		$	6,150
State	2,563			338			310
Foreign	14,528			12,504			8,275
Deferred
Federal	(13,361		)	(3,979		)	(668		)
State	(1,891		)	(43		)	14
Foreign	(76		)	751			695
Total	$	21,614		$	17,312		$	14,776

Deferred Income Taxes

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:



	December 31, 2015		December 31, 2014
Deferred tax assets:
Fixed assets	$	681	$	181
Intangible assets	1,428		3,789
Accrued expenses	10,729		1,282
Net operating loss carryforward	5,233		844
Deferred revenue	2,162		4,328
Stock-based compensation	12,484		6,994
Valuation allowance	—		(149		)
Restricted stock options	—		2
Other assets	14		30
Deferred tax assets	32,731		17,301
Deferred tax liabilities:
Fixed assets	646		800
Intangible assets	1,598		—
Accrued revenue and expenses	511		635
Deferred inter-company gain	—		405
Stock-based compensation	1,672		7,013
Other liabilities	912		24
Deferred tax liability	5,339		8,877
Net deferred tax asset	$	27,392	$	8,424

At December 31, 2015, the Company had current and non-current deferred tax assets of $11,847 and $18,312, respectively, and current and non-current tax liabilities of $365 and $2,402, respectively. At December 31, 2014, the Company had current and non-current deferred tax assets of $2,496 and $11,094, respectively, and current and non-current tax liabilities of $603 and $4,563, respectively.

At December 31, 2015, the Company has a net operating loss in China and Singapore related to the acquisition of Jointech and a net operating loss in the US related to the acquisition of AGS. The net operating losses at Jointech will be utilized prior to its expiration and the net operating loss at AGS will be used each year until expiration. No provision has been made for U.S. or non-U.S. income taxes on the undistributed earnings of subsidiaries or for unrecognized deferred tax liabilities for temporary differences related to basis differences in investments in subsidiaries, as such earnings are expected to be permanently reinvested, the investments are essentially permanent in duration, or the Company has concluded that no additional tax liability will arise as a result of the distribution of such earnings. As of December 31, 2015, certain subsidiaries had approximately $443.2 million of undistributed earnings that we intend to permanently reinvest. A liability could arise if our intention to permanently reinvest such earnings were to change and amounts are distributed by such subsidiaries or if such subsidiaries are ultimately disposed. It is not practicable to estimate the additional income taxes related to permanently reinvested earnings or the basis differences related to investments in subsidiaries.

The reconciliation of federal statutory income tax rate to our effective income tax rate is as follows:



	For the Years Ended December 31,
	2015			2014			2013
Statutory federal tax	$	37,125		$	29,564		$	26,102
Increase/ (decrease) in taxes resulting from:
State taxes, net of federal benefit	341			311			368
Provision adjustment for current year uncertain tax position	—			(1,220		)	—
Effect of permanent differences	7,314			8,589			2,524
Stock-based compensation	7,591			3,782			1,948
Rate differential between U.S. and foreign	(31,094		)	(24,772		)	(17,279		)
Change in foreign tax rate	9			754			(59		)
Change in valuation allowance	—			149			489
Other	328			155			683
Provision for income taxes	$	21,614		$	17,312		$	14,776

On September 22, 2005, the president of Belarus signed the decree “On the High-Technologies Park” (the “Decree”). The Decree is aimed at boosting the country’s high-technology sector. The Decree stipulates that member technology companies have a 100% exemption from Belarusian income tax of 18% effective July 1, 2006. The Decree is in effect for a period of 15 years from July 1, 2006. The aggregate dollar benefits derived from this tax holiday approximated $20.8 million, $16.8 million and $9.7 million for the years ended December 31, 2015, 2014 and 2013, respectively. The benefit the tax holiday had on diluted net income per share approximated $0.40, $0.34 and $0.20 for the years ended December 31, 2015, 2014 and 2013, respectively.

Uncertain Tax Positions

The liability for unrecognized tax benefits is included in income tax liability within the consolidated balance sheets at December 31, 2015 and 2014. At December 31, 2015 and 2014, the total amount of gross unrecognized tax benefits (excluding the federal benefit received from state tax positions) was $62 and $200, respectively, (excluding penalties and interest of zero and $12 in 2015 and 2014). Of this total, $62 and $212, respectively, (net of the federal benefit on state tax issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of its provision for income taxes. There was no accrued interest and penalties resulting from such unrecognized tax benefits at December 31, 2015. The total amount of accrued interest and penalties resulting from such unrecognized tax benefits was $12 and $189 at December 31, 2014 and 2013, respectively.

The beginning to ending reconciliation of the gross unrecognized tax benefits were as follows:



	For the Years Ended December 31,
	2015			2014			2013
Balance at January 1	$	200		$	1,271		$	1,271
Increases in tax positions in current year	—			—			—
Increases in tax positions in prior year	—			—			—
Decreases due to settlement	(138		)	(1,071		)	—
Balance at December 31	$	62		$	200		$	1,271

There were no tax positions for which it was reasonably possible that unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date.

The Company files income tax returns in the United States and in various states, local and foreign jurisdictions. The Company’s significant tax jurisdictions are the U.S. Federal, Pennsylvania, Canada, Russia, Denmark, Germany, Ukraine, the United Kingdom, Hungary, Switzerland and Kazakhstan. As a result of 2015 acquisitions, the Company has an additional filing responsibility in India. The tax years subsequent to 2011 remain open to examination by the Internal Revenue Service and generally, the tax years subsequent to 2011 remain open to examination by various state and local taxing authorities and various foreign taxing authorities.